Guidance

Recognised stock exchanges: definition, legislation and tables of recognised exchanges

Updated 6 June 2023

What recognition means for a stock exchange

Recognition under section 1005 Income Tax Act (ITA) 2007 is for tax purposes only and confers no other status on the exchange concerned. It does not constitute any form of recognition or approval for regulatory or other purposes nor does it provide any form of approval or recommendation of any of the investments which are listed or traded on that exchange.

The definition of a recognised stock exchange is given in section 1005(1) ITA. It includes:

• any market of a recognised investment exchange designated as a recognised stock exchange by an order made by the Commissioner for HMRC
• any market outside the UK designated in such an order made by the Commissioner for HMRC

Stock exchanges recognised by HMRC

Designation of a stock exchange as a recognised stock exchange is by order of the Commissioners for HMRC.

All UK and overseas stock exchanges which have been recognised for tax purposes are listed in the following tables:

• Table 1 — Recognised stock exchanges: designated exchanges
• Table 2 — Designated countries where any stock exchange, which is a stock exchange within the meaning of the law of that country, is a ‘recognised stock exchange’

Before 19 July 2007, recognised stock exchanges were designated under section 841(b) Income and Corporation Tax Act 1988 (ICTA88). Any of these previously designated stock exchanges are treated as also designated for the purposes of section 1005 ITA.

Some orders designate a class of exchanges, such as those operating within a particular jurisdiction (see Table 2).

While HMRC tries to maintain an up to date list this is not always possible because markets frequently rename, re-structure or merge.

Changes to the operation or ownership of a stock exchange may affect its status as a recognised stock exchange.

It is the responsibility of the stock exchange to inform HMRC of any changes to the ownership, operation or regulation of the exchange or any of its markets.

Find HMRC contact points for Recognised Stock Exchanges.

Listed shares and securities

Some tax rules refer to shares and securities ‘dealt in’ or ‘admitted to trading on’ a recognised stock exchange. Where this is the case, shares and securities dealt in or admitted to trading on any stock exchange designated by the Commissioners for HMRC (see Table 1 and Table 2 ) would qualify.

Other tax rules refer to shares and securities being ‘listed on a recognised stock exchange’ (or similar phrasing).

Section 1005(3) ITA defines ‘listed on a recognised stock exchange’ for these purposes, as referring to shares and securities which are:

• admitted to trading on a recognised stock exchange
• included in the official UK list maintained by the Financial Conduct Authority (in its capacity as the UK Listing Authority) or are officially listed in a qualifying country outside the UK in accordance with provisions corresponding to those generally applicable in the EU, Norway, Iceland and Liechtenstein (European Economic Area)

The definition of ‘listed’ must be applied to the specific class of shares or securities. Whether a share or security is ‘listed’ is a question of fact. HMRC does not designate ‘listed’ status. However, Table 1 and Table 2 provide guidance, based on the most up to date information held, about whether shares and securities admitted to the markets of a recognised stock exchange would meet the section 1005(3) ITA definition.

Where the operation or regulation of a market changes, this may affect whether securities traded on that market would continue to meet the definition of ‘listed’.

When considering the application of any tax rules which refer to the listing of shares or securities, always check the guidance or legislation relating to the rules in question for additional requirements regarding the listing of shares or securities.

Alternative finance investment bonds

Certain tax rules about ‘alternative finance investment bonds’ (Shari’a-compliant financial instruments commonly known as ‘sukuk’) require them to be listed on a recognised stock exchange that is regulated in the UK or in the EU, Norway, Iceland or Lichtenstein (European Economic Area) or in Gibraltar.

An alternative finance investment bond listed on an exchange recognised under section 1005 ITA will meet this requirement. The relevant tax rules are contained in:

• Section 564G Income Tax Act 2007 (for Income Tax)
• Section 507 Corporation Tax Act 2009 (for Corporation Tax)
• Section 151N Taxation of Chargeable Gains Act 1992 (for Capital Gains Tax)

They are collectively referred to here as the ‘alternative finance investment bonds rules’.

In addition, certain other exchanges are designated as recognised stock exchanges for the purposes of the alternative finance investment bonds rules only. An alternative finance investment bond listed on such an exchange will meet the listing requirement in the relevant alternative finance tax rules, but the exchange is not a recognised stock exchange for any other purpose. See Table 3 for a list of stock exchanges designated for the purposes of the alternative finance rules only. Designation for these purposes has effect from 1 April 2007.

Tables of recognised stock exchanges

Table 1 — Recognised stock exchanges: designated exchanges

Table 2 — Designated countries where any stock exchange, which is a stock exchange within the meaning of the law of that country, is a ‘recognised stock exchange’

Table 3 — Recognised stock exchanges: alternative finance investment bonds